Government Economic Policies

A set of vocabulary flashcards covering fiscal, monetary, and supply-side policies based on the lecture transcript.

Fiscal policy

A government policy which adjusts government spending and taxation to influence the economy; also known as budgetary policy.

Budget surplus

A situation where government revenue exceed government spending, which can trigger a slowdown if the surplus is very large.

Expansionary fiscal policy

A policy employed during a surplus where government spending is increased and tax is cut to stimulate growth and employment.

Budget deficit

A situation where government expenditure exceeds government revenue, which often requires the government to borrow and enter debt.

Contractionary fiscal policy

A policy employed during a deficit where government spending is cut and tax is increased to help control inflation.

Monetary policy

A government policy that adjusts the interest rate and foreign exchange rates to influence the demand and supply of money, usually conducted by the central bank.

Expansionary monetary policy

A policy where the government increases money supply and cuts interests, causing currency exchange rates to decrease and increasing demand of exports.

Contractionary monetary policy

A policy where the government decreases money supply and increases interest rates, causing currency exchange rates to increase and reducing demand of exports.

Supply side policies

Microeconomic policies aimed at increasing supply and productivity in the economy to enable long-term economic growth.

Public sector investments

Investments in infrastructure such as transport and communication to make the flow of resources quick and easy.

Privatization

Transferring some public corporations to private ownership to increase efficiency and output via the profit-motive.

Subsidies

Financial grants made to industries that need it, providing more money for producers to increase supply.

Deregulation

Removing or easing the laws and regulations required to start and run businesses to reduce costs and hassle.

Labour market reforms

Changes such as reducing trade union powers, lowering minimum wages, or reducing welfare payments to increase incentives to work and invest.